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Digm Piece (Op-Ed)

How Starting a Family Ruined My Finances

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Wait… Wait… I know what you’re thinking. How can this guy be writing an article about something as precious as his family, but sound so insensitive in the title? What does he mean that starting a family ruined his finances? Surely there has to be a positive angle when talking about family finances.

Let Me Explain

First and foremost, starting a family is one of the best things that has ever happened to me in my life and anyone who has experienced being a parent will tell you how much joy parenting really is—up to a certain point. The truth of the matter is that children are blessings and can change your life for the better, but unfortunately they can also change your wallet in the opposite direction if you aren’t properly prepared.

Love Is in the Air

My wife and I met over 15 years ago and it was love at first sight. Well, maybe not exactly—I had to convince and woo her a little, but she eventually made the right choice and fell to my charm (or my unwavering persistence). We had a great time dating and rarely discussed starting a family because we were enjoying our lives, careers, and looked forward to more world traveling. After five years of dating, we decided to get married and wasted no time starting a family thereafter. My daughter was born approximately 11 months after our nuptials and this was one of the best days of our lives. We enjoyed our new family immensely, but soon after we were hit with the reality of parenting and raising a young child.

Love Didn’t Pay the Bills

Bills started to pile up immediately and we were left with many tough decisions to make as it related to our priorities. Were we going to pay our medical bills first or use our cash to buy clothing and diapers? Could we afford child care or should one of us stay home? Was it time to pick up a second job or was there another way to bring in more income? The fact that it is expensive to start a family set in pretty quickly.

Love Lowered Our Credit Scores

After months of robbing Peter to pay Paul, we were almost maxed out on our credit cards in an attempt to make ends meet. We watched our credit scores closely and noticed that these high credit card balances had taken a toll on our score, dropping it almost 30 points in a short amount of time. We learned that overuse of our credit cards had taken us way over the recommended maximum utilization ratio of 30 percent.

Love (and a Little Discipline) Fixed It All

Immediately, we started to budget our expenses and focus on our needs rather than our wants. We tightened our belts a little and by doing so we were able to pay down our debt and get our score back on track. We also started to pay ourselves first and created an emergency fund with a high-yield savings account in order to prevent ourselves from being dependent on credit. We focused on our needs and budgeted for the wants, and before we knew it, our ruined finances became a walk in the park of family finances.

The Lovely Conclusion

Starting a family is still our greatest accomplishment, but turning our family finances around is a close second. Never underestimate the power of planning, but also don’t beat yourself up if life throws you lemons—or babies for that matter. Now at child number two, my family finances are growing and what seemed as an out of control situation was put back in order with a little planning and discipline.

Do you have any financial comeback stories? I would love to hear them below.

 

Ash Exantus aka Ash Cash is a speaker, bestselling author, personal finance expert, and business consultant. Ash has established himself as a thought leader and trusted voice with Corporate America, Colleges, Churches, and Community based organizations. He is the Head of Financial Education at BankMobile and Editor-in-Chief at Paradigm Money.

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Digm Piece (Op-Ed)

Do What You Love for Free – Here’s Why

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This is ParadigmMoney.Com, right? So, speaking about a paradigm shift should come as no surprise. In science and philosophy, a paradigm is a distinct set of concepts or thought patterns, including theories, research methods, postulates, and standards for what constitutes legitimate contributions to a field. When speaking about money, most believe it is something you work for and not something that works for you. In all truth, the one percenters understand this concept quite well. In order, to wake up and do what you love, you too must shift your thoughts when it comes to finances.

Doing what you love for free allows you to create freely. You can come up with disruptive, out of this world, never seen before creations that will rock this planet. Take Elon Musk from South Africa, founder of X.com which went on to become PayPal and sold to eBay for 1.5 billion dollars. Musk is also the CEO of SpaceX which designs, manufactures and launches advanced rockets and spacecraft. The company was founded to revolutionize space technology, with the ultimate goal of enabling people to live on other planets. You may say, of course, he can do this, he is a billionaire and co-founder of Tesla.

Not true. PayPal, Tesla, and SpaceX are all products of Musk doing what he loved. As a child, he was an avid reader and taught himself computer programming leading to the creation of X.com. He dropped out of college to start a company with his brother and here’s what he had to say about that PayPal deal… “My proceeds from the PayPal acquisition were $180 million. I put $100 million in SpaceX, $70m in Tesla, and $10m in Solar City. I had to borrow money for rent.” Elon Musk’s current net worth is estimated to be at about $13.3 billion. No bad at all.

The reality of the matter is the less you are attached to money the more money flows to you. Pay more attention to creating things that move the culture forward. Starting at doing what you love with ultimately position you for financial success and happiness.

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Digm Piece (Op-Ed)

How Much Does College Cost?

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Photo credit iStock by Getty Images

How much does college cost these days? If you’re preparing to go to college and will need to find a way to finance your own education, this is one of the first steps to figure out.  Then you’ll want to find out all of your options and create a plan. Here’s a quick breakdown on the typical cost of college. (more…)

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Digm Piece (Op-Ed)

My Biggest Financial Mistake

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Happy Financial Literacy Month…the month where we shine a spotlight on financial education and the importance it plays in our lives. I talked before about my financial bounceback and received a few messages from readers about how that story showed them that anyone can have financial hardships.

Now it’s time to be even more transparent. To kick off Financial Literacy Month, I want to share my biggest financial mistake to date in hopes to further inspire people.

Whenever I want to accomplish something, I start with a plan and follow it no matter what. Some people called it stubbornness, but I like to call it persistence. One day, my persistence bit me in the ass-et, causing all kinds of grief and hardship. Having a plan can be great, until it’s not.

At one point in my life, I decided to leave a great-paying job to become a full-time entrepreneur. I was on a quest to follow my dreams. I knew the pitfalls and risks that came with my decision, but I felt like I was immune because, well it was my calling. Within a few months of taking the leap, I fell behind on my mortgage and almost lost my home.

Letters from the bank — and ultimately, their lawyers — came pouring in. In no time, my family was facing foreclosure. This was the first time anything of this magnitude had ever happened to me. I didn’t know where to start or what to do.

My family and I braced ourselves for what seemed like the inevitable: we packed our bags with nowhere to go. Just when I thought all hope was lost, I learned about less extreme ways of handling and resolving missed mortgage payments.

One option was a short sale. I could sell my home for less than I owed on the mortgage, if my lender would approve the transaction. The outstanding balance would then be forgiven. Another option was a deed in lieu of foreclosure. This would allow me to voluntarily give up my rights to the property instead of going through the stressful and costly legal foreclosure process.

Ultimately, I didn’t have to do either because I found one more option. At the time there was a federal government program called the Making Home Affordable Program which helped homeowners avoid foreclosure. I was able to do a loan modification where my lender changed the terms of my loan to allow me to make lower payments so my family could stay put. It made staying in our home a reality.

The loan modification began with a three-month trial period. After I successfully made the first three payments on time, the modification became permanent. While that was great news, the delinquent payments remained a blemish on my credit report. However, time does heal all. As I continue to make on-time payments toward my mortgage, the delinquencies will eventually fall off. Lesson learned. The next time I follow a dream, I’ll do it a lot more carefully.

Now that I put all my skeletons on the table, what is your biggest financial mistake? Use the comments below to tell us about your biggest financial mistake, what you learned from it and how you overcame it.

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